This article provides an overview of Shopify Payments, its advantages, disadvantages, and how to set it up!

Hello, I'm Kanahina! I'm Kanahina.☆

Today, I'd like to share with you an in-depth article about Shopify Payments.

Kanahina works in the e-commerce department of a web production company and touches Shopify every day.
She has been selected as one of the Shopify Experts, one of only 90 companies in Japan, so she will be able to share her specific experience with you in the article!😊

What is Shopify Payment?

Shopify Payment is the official payment method offered by Shopify.
It allows online store owners to make credit card and other payments directly within Shopify without having to install an external payment service.
Shopify Payments can be easily activated with a few clicks from the admin settings and can be reflected instantly without any special technical knowledge. (JCB cards are not available for immediate use)

With regular e-commerce services, it often takes time for screening and other processes to introduce credit, so this is Shopify's strength!😊

What exactly can I use?

Specifically,
Visa, Mastercard, American Express, JCB, Diners Club, Discover, Apple Pay, and Google Pay can be utilized if set up from the management screen.
JCB cannot be used immediately.
Once JCB is installed, Diners Club and Discover will be automatically accepted.

Differences from other payment methods

Many e-commerce services require the introduction of external payment methods.
This includes third-party services such as PayPal and Stripe.
While these services are certainly reliable and used by many stores, they are often labor intensive to implement and manage.
In this respect, Shopify is very advantageous because you can get started right away, and I always find that it makes my business run more smoothly!

Also, one of the biggest advantages of Shopify Payments is its integration.
The ability to centralize all payment-related management within the Shopify dashboard, without having to implement an external service, is very appealing!
This makes troubleshooting payments, processing refunds, and reviewing reports much easier.

Also, compared to other payment methods, Shopify Payments has much lower fees.
In particular, the more expensive Shopify plans a store owner uses, the lower the fees for payments.

However, not everything is perfect.
There are some downsides to Shopify Payments. We'll discuss these in more detail in the sections that follow.
First, we will discuss the advantages, followed by the disadvantages section😊

Advantages of Shopify Payments

The quality of the buying experience is crucial to the success of an online store.
Central to this is the smoothness and reliability of the payment process.
Shopify Payments has many advantages that meet these requirements.

Advantages in terms of fees

Many payment services charge a fixed fee per transaction.
This is a significant cost, especially for stores with high transaction volumes and amounts.

Shopify Payments has a low fee of 3.4% for Visa and MasterCard, even on the lowest basic plan.
Considering that free e-commerce services such as BASE charge a fee of about 6%, this is a low setting, and since there is no separate monthly fee, it is very affordable.

You can further reduce these fees by using a higher plan.
This allows for higher profit margins and more competitive pricing, so you can move up the plans depending on your sales desires!😊

However, most customers start out with the lowest basic plan!

Seamless integration: complete within the Shopify platform

Using an external payment service requires a lot of setup and management work.
Shopify Payments, however, is completely within the Shopify platform, eliminating all of that hassle!

Customers can complete the purchase process seamlessly without being redirected to a third-party page.
This also contributes to higher purchase conversion rates.
In addition, store owners can easily manage and track payment-related matters from the Shopify dashboard. It's a great way to avoid more administrative screens.😊

Security Strengths

When it comes to online payments, the security of customers' credit card and personal information is a top priority.
Shopify Payments uses industry-standard security technology to provide a high degree of protection for your customers' information.

Users can feel confident in their purchases because they meet the very high security standards of PCI DSS.
In addition, features and tools are provided to minimize the risk of unauthorized transactions.
This allows store owners to minimize security risks and focus on their business.
Older e-commerce services did not have fraud analysis, but with Shopify, the risk of fraudulent orders is displayed for each order from the administration screen, which is very helpful for store owners to make decisions.
If there is a high level alert, it is basically safer to cancel the order. When I guide my clients, I also guide them to contact us to cancel the order if there is a high level.

Disadvantages of Shopify Payments

Limited availability of countries and regions.

Although Shopify Payments is a worldwide payment service, unfortunately it is not available in all countries and regions.
Some countries and regions may have difficulty implementing Shopify Payments due to regulatory, legal, or infrastructure issues.
This can be a barrier for store owners looking to expand into certain markets, so when considering cross-border e-commerce, please be aware of any countries where it may not be available.

In fact, the following 23 countries are the only ones where the system is actually available. (as of May 2023)

Australia (as of May 2023)
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Hong Kong SAR
Ireland
Italy
Japan
Netherlands
New Zealand
Portugal
Romania
Singapore
Spain
Sweden
Switzerland
United Kingdom
United States of America

For the latest information,Please check the official Shopify website for the latest information.

Restrictions for certain industries and products

In addition, Shopify Payments does not support all industries or product categories.
Certain risky industries and highly regulated product categories may be restricted from using Shopify Payments.

For example, certain categories such as adult products, certain health products, expensive jewelry or artwork may not be eligible for Shopify Payments.
Specifically,Shopify's official website hereon the official Shopify website.

Commission Issues: Costs for refunds and cancellations

Another disadvantage of Shopify Payments is the fees for refunds and cancellations.
Specifically, if a refund or cancellation occurs for any reason after the sale of an item has been finalized, the fees associated with that transaction will not be returned.

For example, if a cancellation occurs after the sale of a high-value item has been confirmed, the store owner is responsible for any fees associated with that transaction.
This is a major disadvantage, especially for industries that have a high rate of returns or cancellations, or for stores that handle high-value items, so it is a good idea to consider the price of your product and your cancellation rate!
However, there is a manual mode that does not automatically confirm sales after a credit card payment is made, so Shopify allows the store owner to make a decision after the user has made the payment and then confirm the payment, which mitigates the risk somewhat.

How to set up Shopify Payments

When setting up an online store, setting up payment processing is one of the steps that cannot be avoided.
Unlike external payments, Shopify Payments makes it easy to complete this process.

Below is a step-by-step guide on how to set up Shopify Payments.

(1) Create a Shopify account

First, visit the official Shopify website to create an account.
Enter the required information to open an account.

(2) Access to the management screen

Once you have created an account, log in to the Shopify administration page.
From the dashboard, click on "Settings" and select "Payments" in that section.

(3) Select Shopify Payments

In the "Payments" section, click on the text "Manage" for Shopify Payments to go to the advanced settings screen and enter various information.
You will be asked to select a card brand, set the time of payment, prevent fraudulent orders, and more.

(4) Enter & save necessary information

Next, press the "Complete Account Setup" button to enter information about your business and bank account details.
This will allow you to set up the recipient of your sales proceeds.

(5) Payment Confirmation Method

Finally, choose whether you would like to finalize payments "manually" or "automatically.
Manual" is a mode in which the store owner manually confirms the amount of payment without confirming the amount at the time the user makes a purchase with credit.
The advantage of this mode is that if there is an unauthorized order or a wrong order, you will not be charged a cancellation fee even if you cancel the order. The major advantage of this mode is that if there is an unauthorized order or a wrong order, no cancellation fee will be charged.

In the "Automatic" mode, the amount of the order is confirmed when the user makes a purchase with credit card, and the store owner does not have to confirm the amount.

I guide my clients that "Manual mode" is better at first if orders are small and no other applications such as warehouse integration are included.
Surprisingly, there are a lot of "high level fraudulent orders", so I think it is better to start a store in manual mode to see how it goes.

Once everything is set up, I recommend using the test mode to make sure the actual payment process is working properly.
This will minimize the risk of problems with actual users making purchases!😊

Tips for getting the most out of Shopify Payments

Shopify Payments is favored by many store owners for its ease of implementation and integration with the administration panel.
However, there are some disadvantages, such as the need to choose a plan based on sales size and order cancellation fees, so it is advantageous to know a few tips and techniques to get the most out of its features.

Advice from Kanahina😊

Check the commission plan

Shopify Payments fees vary depending on the Shopify plan you are using.
Choose the plan above to reduce the credit card transaction fee per transaction, and choose the best plan for your transaction volume.

Fraudulent Transaction Monitoring

Fraudulent transactions may result in additional fees and fines.
Shopify has built-in tools to detect fraudulent transactions, so take advantage of them to minimize your risk.
Basically, it is better to cancel "high level" fraudulent orders. If an order is placed with a fraudulent card and a chargeback is made, the product has been sent but the payment has not been received. This is the worst case scenario.

Chargeback
A chargeback is when a customer who has a credit card does not agree to pay for the charges due to fraudulent use, and the credit card company cancels the sales.

Clarification of refund policy

When refunds or cancellations occur frequently, a fee is charged for each refund or cancellation.
If the refund policy is clarified and users are informed in advance, it will reduce the number of easy cancellation calls and decrease the likelihood of cancellations and refunds.

Techniques to Improve the User Experience

Quick payment process

We feel that Shopify has fewer items to include in the payment process than Japanese e-commerce services.
Also, I have the impression that the payment process has become smoother since the payment screen was combined into one page in October 2023, instead of being divided into three pages!

Providing a variety of payment methods

In addition to Shopify Payments, GooglePay, Apple Pay, and Shop Pay, which is related to Shopify, can be added from the Shopify Payments payment settings screen, so these payment methods can be used together to increase user choice and reduce purchase This can increase user choice and lower the hurdle to purchase.
Other external payment methods such as Amazon Pay, PayPay, and convenience store payments can also be added.

Enhanced security

Security is an absolute prerequisite for users to trust you.
Of course, Shopify comes with an SSL certificate, and clearly displaying security information in your store will help your customers feel more secure.

And best of all, Shopify is Level 1 PCI DSS certified.
PCI DSS is the credit card industry's global standard for the secure handling of customer credit card information, and Level 1 is as secure as a financial institution.

I read in a Shopify related article that not many companies in Japan have obtained Level 1 PCI DSS certification, so it is surprising that this level of security can be provided for only about $300 per year.

As a web director, I want my customers to operate their businesses in a secure environment, so I would recommend Shopify to them very strongly.😊

Conclusion

There are many factors involved in running an online store, and payment processing is one of the most important.
Shopify Payments is a powerful tool that many store owners use every day to make this process go smoothly.
With domestic services, there is quite a cumbersome process to install credit, so Shopify Payments is really easy and quick to implement!

Overall Evaluation of Shopify Payments

The biggest draw of Shopify Payments is its simplicity and integration.
The payment process is completed within the Shopify platform without the need to implement external payments, which is very convenient for store owners.

The advantages in terms of fees and security are also major points of appreciation.

On the other hand, there are some disadvantages, such as restrictions on countries and regions where it can be used, restrictions on certain types of businesses and products, and commission issues for refunds and cancellations.

We recommend that you consider all of these points and the products you handle, cancellation rates, etc., before making a decision on whether or not to use Shopify Payments.

In my opinion, Shopify Payments is not suitable for very expensive products (500,000 to several million) with a high cancellation rate. (When you cancel, the fee will not be refunded after the payment is confirmed)
Other than the above, I think Shopify Payments is a very effective and beneficial payment method.

Final advice for store owners

The success of an online store relies heavily on the quality of the customer experience.
The payment process plays a central role in this process, and any trouble or inconvenience in this area can be a major factor in undermining customer trust.

While Shopify Payments offers many benefits, it is important to understand its characteristics and limitations, and to optimize and customize the settings to suit your business model and target customer base.

Finally, if you do a good job of constantly seeking to optimize not only payment processing, but also product quality, support, marketing strategies, and other aspects of your online store operation from an overall perspective, Shopify can help you keep your monthly costs lower than other domestic e-commerce services, while still providing you with a highly flexible design and With a highly flexible design and system & thousands of apps, you can create a very high-level site.

In addition, you can run your e-commerce site on a fast server with very strong security, so Kanahina highly recommends Shopify!